Travel On Inc. sells luggage. they sell a duffle bag, a carry-on suitcase and a deluxe suitcase. The price and variable cost for each type of luggage is listed below. 

   Price    Variable Cost

 

Duffle Bag R100    R25

 

Carry-on R180    40

 

Deluxe 300    120

 

“The total fixed costs for Travel On Inc. equals R60,000. For every 8 duffle bags, Travel On Inc sells it sells 3 carry-on suitcases and 1 deluxe suitcase. “   with the following

 

The total fixed costs for Travel On Inc. equals R60,000. For every 8 duffle bags. Travel On Inc sells, 3 carry-on suitcases and 1 deluxe suitcase are sold.

 

Required:

 

1.) Calculate the package contribution margin.

 

2.) Calculate the break-even point in units for duffle bags, carry-on suitcases and deluxe suitcases.

 

3.) If Travel On Inc. has a target income for the coming year of R300,000, how many packages will the company have to sell?

 

4.) Based on your answer in Part C, prepare a contribution margin income statement for the coming year.

 

5.) What is the company’s margin of safety in packages?